Section 43B → Section 37

Deductions allowed only on actual payment (taxes, PF, bonus, leave encashment, MSME dues)

Section 43B of the old Income-tax Act, 1961 · new section 37 under the Income-tax Act, 2025

New reference Section 37

Income-tax Act, 1961Section 43B

Taxes, employer PF/gratuity contributions, bonus, leave encashment, bank/NBFC interest allowed only on payment
Payment by the return due date allowed for the year (except MSME dues)
43B(h): MSME dues allowed only when paid within the MSMED Act time limit

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 37

Same rule, now section 37
Items listed in 37(2)(a)–(g), including MSME dues in clause (g)
Due-date relief for payments by the return due date retained, except for MSME dues

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Renumbered; list of items and the MSME rule carry over.

Practice notes

For MSME dues, the time limit is still section 15 of the MSMED Act (45 days with an agreement, 15 days otherwise).
Tax audit reporting of these items moves to the new tax audit form.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

What is section 43B(h) called in the new Income Tax Act 2025?

Section 37(2)(g) of the Income-tax Act, 2025: amounts payable to micro or small enterprises beyond the MSMED Act time limit are allowed only on payment.

What is section 43B called in the new Income-tax Act, 2025?

Section 43B of the Income-tax Act, 1961 corresponds to Section 37 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

What changed in section 43B under the new Income Tax Act?

Renumbered; list of items and the MSME rule carry over.

Is section 43B still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 43B of the 1961 Act. Section 37 of the 2025 Act applies from tax year 2026-27.

Related sections

40A(3)→36Disallowance of cash expenses above ₹10,000 a day (and related-party payments)44AB→63Tax audit of accounts for businesses and professions above turnover limits 24→22Deductions from income from house property: 30% standard deduction and home-loan interest